This study will examine whether hospitalized Medicaid patients receive a different level of treatment than privately-insured patients for similar clinical conditions, and whether Medicaid cost-containment policy is likely to introduce or aggravate such differences in care. Discharge data from California hospitals for the years 1982, 1985, and 1988 will be used for the study. The mean length of stay, total cost per patient, and rates of procedure-use will be calculated for both Medicaid and private patients for a range of Diagnosis Related Groups (DRGs). Payer-related differences in these measures of resource use will be tested for statistical significance after controlling for pertinent demographic, clinical, and hospital characteristics that may independently affect the level of inpatient treatment. Changes in treatment patterns resulting from a 1983 Medicaid cost- containment policy will be identified using 1982 and 1985 data. The effect on treatment of a 10% real decrease in the average Medicaid per diem rate of reimbursement between 1985 and 1988 will be tested using data from these two years. A non-equivalent control group design will be used to control for secular changes in medical treatment and technology during these time periods. This study will, therefore, enhance understanding of a number of aspects of health care delivery and policy, including: 1) the impact of insurance-status on the utilization of hospital resources; 2) the impact of Medicaid cost-containment policy on the treatment of Medicaid patients; and 3) the impact of financial incentives on the use of inpatient tests and procedures of varying cost, complexity, and discretion.